It's been a good week for BJ's Restaurants, Inc. (NASDAQ:BJRI) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.8% to US$33.30. It looks like a credible result overall - although revenues of US$337m were what the analysts expected, BJ's Restaurants surprised by delivering a (statutory) profit of US$0.32 per share, an impressive 111% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, BJ's Restaurants' nine analysts are forecasting 2024 revenues to be US$1.35b, approximately in line with the last 12 months. Per-share earnings are expected to jump 39% to US$1.42. In the lead-up to this report, the analysts had been modelling revenues of US$1.36b and earnings per share (EPS) of US$1.29 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the solid gain to earnings per share expectations following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.1% to US$38.78. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values BJ's Restaurants at US$45.00 per share, while the most bearish prices it at US$24.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that BJ's Restaurants' revenue growth is expected to slow, with the forecast 1.9% annualised growth rate until the end of 2024 being well below the historical 6.1% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than BJ's Restaurants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around BJ's Restaurants' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that BJ's Restaurants' revenue is expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple BJ's Restaurants analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 2 warning signs for BJ's Restaurants that you should be aware of.
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